Ericsson in LG joint venture

Swedish telecom giant Ericsson has bought a majority stake in Korean firm LG and Nortel's joint venture company LG-Nortel for $242 million and will now become LG-Ericsson.

The deal received the backing of market analysts on Wednesday.

David Halldén at HQ Bank is positive towards the deal, arguing that the purchase will give Ericsson access to new customers in South Korea.

“The North American acquisition was a stock example,” Halldén said, referring to Ericsson’s purchase of other Nortel operations in 2009.

“This could strengthen the relationships with certain operators further, in this case in the Korean market.”

The price tag of $242 million for a company which turns over $650 million has also been deemed a success.

“That has to be considered cheap,” Halldén said.

“The purchase will strengthen Ericsson’s position in Korea as well as gaining access to new sales channels,” the company writes in a statement on Wednesday.

The new firm LG-Ericsson will become one of the largest telecom actors in South Korea.

“Korea is one of the world’s largest telecom markets, where consumers have a large demand for new services. Thanks to our cooperation with our new partner LG Electronics we strengthen our position and improve our opportunities regarding future technological shifts, such as LTE,” Ericsson CEO Hans Vestberg writes in the company statement.

In 2009 LG-Nortel had 1,300 employees and turned over $650 million.

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Ericsson suspends all Russia operations indefinitely

Swedish network equipment maker Ericsson said Monday that it was suspending all of its Russian operations over the war in Ukraine for the foreseeable future.

Ericsson suspends all Russia operations indefinitely

The telecom giant already announced in late February that it would stop all deliveries to Russia following Moscow’s February 24 invasion of Ukraine.

“In the light of recent events and of European Union sanctions, the company will now suspend its affected business with customers in Russia indefinitely,” Ericsson said in a statement.

The company added that it was “engaging with customers and partners regarding the indefinite suspension of the affected business.”

“The priority is to focus on the safety and well-being of Ericsson employees in Russia and they will be placed on paid leave,” it said.

READ ALSO: How has Sweden responded to Putin’s war in Ukraine so far?

Hundreds of Western firms ranging from Ikea to Coca-Cola, Goldman Sachs and McDonald’s have stopped operations in the country since the invasion, with French banking group Societe Generale announcing Monday it was selling its stake in Russia’s Rosbank.

Ericsson has around 600 employees in Russia, and is a “major supplier to the largest operator MTS and the fourth largest operator Tele2,” a company spokeswoman told AFP, adding that together with Ukraine, Russia accounts for less than two percent of revenue.

As a result, the equipment maker said it would record a provision for 900 million Swedish kronor ($95 million, 87 million euros) for the first quarter of 2022 for “impairment of assets and other exceptional costs,” though no staff redundancy costs were included.
Ericsson is due to publish its first quarter earnings on April 14.